Trump is losing the trade war with China based on his favorite report card, and it's probably going to keep getting worse

The US trade deficit hit $55.5 billion in October, the
highest since October 2008.

The increase in the deficit came due to continued growth in
imports, while exports actually fell.

The trade deficit with China also hit a record level.

One of President Donald Trump's goals for the trade war was
to reduce the trade deficit, but the president's own policies are
likely prompting some of the widening gap.

Shrinking the US trade deficit has been a key goal of President
Donald Trump's trade war.

Ad

But the
Census Bureau announced Thursday that the US trade deficit
grew to $55.5 billion in the month of October, the highest in
exactly 10 years. That was a 1.7% jump from September, as imports
rose by 0.2% and exports fell by 0.1%.

Trump has long been focused on the trade deficit as a signal that
his administration's tariffs on Chinese good and metals are
working, despite the fact that
most economists discount the measure as a sign of effective
trade policy.

Looking at the main target
of the trade war, China, the trade deficit was similarly
dismal. The unadjusted goods trade deficit hit $43.1 billion in
October, the highest level ever.

"The stronger dollar and slower growth in China and Europe
are hurting exports, and the tariffs are a real problem too;
exports of soybeans fell by $0.8 billion to a four-year low, down
43% year-over-year," Shepherson said.

Those existing drags on exports - the strong US dollar and
slowing economic growth in foreign countries - in conjunction
with the tariffs, combine to make the perfect recipe for weakness
on that side of the deficit ledger.

A few things could turn around the deficit situation. If
the US economy were to cool off, as many economists expect, it
could slow the pace of import growth. At the same time, if Trump
is able to strike a trade deal with China, a prospect of which
economists and experts are more skeptical, export growth could
rebound and close the gap.